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Dwindling Diesel Fuel Reserves

Concerning diesel fuel supplies, many people have reached out to my congressional office worried about this issue. This is another longer post with a lot of information, but here’s what you need to know:

Right now, the U.S. has approximately 25 days’ worth of diesel reserves. Friends, that does NOT mean our nation will exhaust its diesel supply in 25 days. Please do not fall for those types of headlines. What 25 days means is that if all production of diesel were to somehow come to a screeching halt, what’s in reserves right now would last approximately 25 days given the current demand.

The reality is that we’re not going to run out of diesel in 25 days because refineries continue to produce diesel fuel around the clock to help replenish what’s being used by trucks, trains, etc.

The purpose of a diesel stockpile is to help accommodate temporary spikes in demand (e.g. holiday shipping) or any unforeseen production problems (e.g. refinery malfunctions). Adequate stockpiles also help ensure all the diesel terminals and stations around the country can be properly supplied.

** However, the problem is for a while now, demand for diesel has exceeded supply. Not by a huge margin, but over time, the deficit starts to add up.

There are a several factors causing demand to exceed supply. The most significant is that refining capacity was drastically cut during the early months of Covid, but demand for diesel remained relatively high through the pandemic, and has continued to climb post-Covid. Refineries haven’t quite been able to catch back up with this demand, and of course the Biden Administration’s war on fossil fuels isn’t exactly helping matters. So every day, little by little, we continue to draw down on diesel reserves.

During normal times, we typically stockpile 35 or more days’ worth of diesel. So it’s very concerning that we’re now at 25 and slowing dropping. Again, please don’t think of 25 as a countdown timer; it’s just an easy-to-understand reflection of how much we have in reserves.

The lower this number gets, the more difficult and costly it becomes to properly supply diesel to all the stations and terminals across the nation. This could lead to supply outages in various places. Also, lower supplies have already placed upward pressure on diesel prices. And that’s further worsening the inflation problem. It’s a chain reaction.

This is definitely an issue Congress needs to examine, and I’m keeping a close eye on it. However, like most things, the more government gets involved, the worse it’ll probably get.

Instead, this issue is likely to correct itself, but it won’t be easy or painless. As diesel prices climb, naturally that will lower demand. So there is a point at which higher prices should level out this problem and make it so that we’re no longer drawing down on reserves.

Unfortunately, higher prices are the last thing we need right now.